The last two weeks we’ve covered the market acceleration in the Pacific. From aggressive capacity management to higher demand, this sphere of global trade has sharpened in the second half of 2023.

While the Pacific continues to step with some pep, America’s other notable import market has stuttered in comparison.

The transatlantic westbound lane is currently juggling low demand and a surplus of capacity. Shipping lines are treading water to make a profit as floating rates are drowning under pre-pandemic levels.

With great pace, we’ve arrived at a soft Atlantic market

This current status of inbound trade arrived in the Atlantic with great pace.
Towards the beginning of the year, this trade was actually one of the few remaining that shipping lines could still net generous returns from.

As the transpacific softened like an elephant getting eight-hours’ sleep on a Tempur-Pedic mattress, the Atlantic miraculously staved off the impacts of a global decline in international shipping.

In fact, the lane became a gold rush as its high rates went unperturbed earlier in the year.

Major lines shifted their vessel capacity from the Pacific to the Atlantic opting for lucrative westbound services into the U.S. from Europe.

The party was fun while it lasted, but the profitable rates posted in this lane were not a sustainable trend. They were more left over from a wild two-years rather than a residual reflection of high demand.

Just like other trades, import volumes have been declining in the Atlantic since the start of the year and, unlike the Pacific currently, still are.

The Journal of Commerce reported an 8.2 percent decline in first-half volumes at Rotterdam, Europe’s largest port, while Belgium’s Antwerp-Bruges endured a sharp drop as well in its throughput.

The lane of profit is now the lane of pain (for the shipping lines).

Rates have tumbled, shippers find themselves in control

“In some cases, we are not even making our costs,” shipping line Hapag-Lloyd’s CEO Rolf Habben Jansen said in an online panel discussion organized by the carrier.

Since the turn of the second half, inbound rates from Europe to the East Coast have tumbled. Freightios Baltic Container Index reports average rate is at $1,634 per unit. In late June, this number was $2,082 per unit.

Shipping lines prospecting high Atlantic rates like 49ers for gold can be mostly blamed for the trade’s second-half downfall.

Their profit pilgrimage, which included reallocating ships to the Atlantic, ultimately has led this pickle—a market with dormant demand oversaturated with excess capacity.

Many services are underutilized as shippers have a lot of options to sift through. It’s a similar phenomenon the Pacific experienced earlier in the year—the shippers are in the driving seat.

How will carriers react?

The question that remains—will carriers be an annoying backseat driver?

The answer is yes…if we’re going off what we observed in the Pacific. Rampant blank sailings, noisy rate increases, and even slow steaming could be playing cards to resuscitate the market in their favor.

However, as unpopular as those tactics are for shippers, they have also proven to be unsustainable to prop up a weak market. They really only leave their mark once there’s enough organic demand to stimulate a playing field.

At this time, there’s been no sign that shipping lines are taking an aggressive approach in the transatlantic, but if they do, we should expect to see something fairly soon.